The consensus that there will be or already is a downturn going on in the US and other major economies is near universal, and the overall make-up of this 'recession' is being explained in traditional terms of negative growth for two quarters. But this recession is not of a kind that has been witnessed before. This is not a typical inflation recession of the kind we saw in the 1960's through the 1980's, where governments brought in higher interest rates to cap price rises, slamming the brakes on investment and consumption. Nor is this a sudden jolt recession as in 1973 when oil prices quadrupled overnight, shocking the world into a rapid slowdown. It is not even a growth surge recession where critical resources or people are in short supply, causing a fallback in activity.This recession will no doubt take a while to explain itself, and become labelled for its chief characteristics. Already it seems to be a recession caused in a new way to any others which have gone before it. In this post, I will try to give my interpretation as to why the world, in the middle of a period of the fastest growth ever known throughout history, seems to be slipping backwards into one almighty mess.As I write the two biggest bond insurers in the world have just lost their Moody's Triple A status, and are losing market value fast. They cover exposure on $2,400 billion of bonds. If they go into liquidation, the effects on the world's banks will be terrible. In the words of Jamie Dimon, chief executive of JPMorgan, said this week when asked about bond insurers: "What [worries me] is if one of these entities doesn’t make it . . . the secondary effect . . . I think could be pretty terrible."Where did it all go so wrong? Computers and IT are so much a part of our world now that it is easy to forget how recently these came into existence as everyday items in our lives, and assumed a pivotal role. I am 54 now, but I had not even seen a computer until I was 30. It was a privilege to see how tasks which before had been so time consuming as to be almost impossible, became easily achievable. For example doing the month end processing of accounts in my business used to take a whole month manually. With my first computer the whole thing was finished in less than one day. It was absolutely staggering to experience the change, and have so much time given back. Computers ended drudgery for millions.Then came the arrival of information. On the back of all the data that began to be stored in PCs and mainframes, gradually the light of detailed information could be shone on business decision taking. When making a business decision prior to say 1984, you were mostly in the dark. It was hard to find out, for example who was a good risk and who was bad risk. You had to practically start your own detective agency, and build contacts to get good information about people in your industry. Then one day, suddenly, and especially with the arrival of the internet, you could start paying at a reasonable price to find out in seconds if you wished to take a risk on a business proposal or not. What had once been a risk, requiring instinctive judgement, where an error would cause painful loss, could be tackled with a ready supply of online information at reasonable cost. Yet more pain was eliminated.Businesses benefiting from these changes all over the world were able to grow much faster than before.And then economic information about other countries began to improve so that people planning international investments could feel safe about exchange rate and other commercial risks, while at the same time being able to use email and internet telephony and other technologies to be 'with' people around the globe, all connected into a neat network that worked as a cohesive unit. None of this was possible prior to the 1990's.Business and investment simply spread all over the globe, sending the world on a growth path of unprecedented proportions pulling hundreds of millions of people previously beyond the reach of the international economy, and joining them into the game. International finance in particular was revolutionised and empowered by technology to move money from where it was cheap to where it was expensive, and make enormous profits.People borrowed money in Tokyo at 2%, converted currency and lent it in Britain in Sterling at 5%, or in New Zealand in local dollars at 6%, making gains on these currencies that swung up as their assets rose in price before a wall of money, and as their interest rates rose. This became known as 'The Carry Trade'. Sovereign Funds such as China's trillions of dollars became available to swing around the globe riding short-term trends, or being used to shore up the dollar ensuring the USA provided a healthy market for Chinese manufactured goods. Hedge Funds found they could drive share prices down or up by concentrating their enormous financial resources, increasing investment returns as they went. Private Equity investors found that they could make money faster by buying businesses and selling them again, after a quick burst of energy to boost their earnings then by building them, or growing them long term. They could browse their targets online, and move in from a distance. And yet while people were turning on their screens and looking at apparently rock-solid information, and feel sure that that they were buying a sure bet, and committing their organisations to placing billions into new and different risks, an air of unreality had somewhere crept in. In the beginning computers were speeding up tasks that had previously taken too long to be practicable. Then they provided information so quickly and efficiently, that what had previously been highly risky decisions, became well-informed low risk decisions. But then people decided to keep the party going, and use computer technology to repackage risks, and create new kinds of risk never before tradeable, buyable or sellable.To do this, they had to make assumptions about the risks they were undertaking. But as they had all become used to the computers efficiently organising the complex details of their businesses, and calculating complex risks, many people had lost the risk-negotiating skills that were second nature to anyone in business pre-computers, to use their own minds to provide simple straight-forward notions, to refer to common sense. Lost in the machines and the complex systems they had created, people have forgotten how to be responsible for, or even to see the overall picture. With the sub-prime securitisation, for example, buyers assumed that only a certain proportion of the debts they were buying would be problematic. They never imagined that nearly all of them would turn bad, although maybe even just one day spent checking around would have told any sensible person not to get involved. In the Norther Rock Building Society in the UK, the Directors never imagined a situation would occur where other banks would not be willing to lend to them at all, and yet banking crises have happened every so often throughout history. The Directors there too had abandoned a sense of ordinary responsibility about the risks they were incurring.All of these actors probably believed or assumed in the back of their minds that as a whole industry was getting involved in taking on unacceptable risks in the same way that they were, either the risks were really quite minimal, or they all assumed that in fact the government or some higher agency was keeping a watch over them from on high.George Soros expressed his view of how risks are being wrongly managed as follows - The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.And yet governments too have become overwhelmed by another effect of technology - the immediacy of communications. This has stopped most governments from getting involved in any detailed risk management and planning, merely concentrating on the news battles of every day. If things looked good enough in the media, then that was a good day's work done. The reality of the risks being undertaken by bankers was not even on the radar.In the UK, fr example Gordon Brown dismantled the control previously exercised by the Bank of England, splitting up its responsibilities between three separate agencies, leaving none of them able to do much to prevent a crisis like the Northern Rock from coming into existence. Why he did it, is not exactly known, but he had claimed for himself ten years of favourable media comment for having done so, before the pigeons have finally come home to roost. And now the mess is obvious, he is showing more concern with news managing the crisis than dealing effectively with its underlying cause, the mistakes he made by stripping away the controls.News organisations might in earlier simpler times have started asking questions, for example if it was sensible for so much sub-prime securitisation to be going on, or for Building Societies in the UK to be financing themselves predominantly with 24 hour interbank money at variable rates, and lending it for years ahead at fixed rates. But the media has got itself involved in trading with governments for favors, typically offering favorable comment to government in exchange for the right to expand their businesses, or win advertising revenues etc.In fact there has resulted from the detachment created by technology a total abandonment of anyone acting in the role of responsibility-taker. Governments are pinned down by the need for short term approval. Media will say or write whatever it takes to please the government or whoever they are canvassing for favours. The ordinary common sense input of everyday people has been overridden and lost completely.In Britain you used to contact your MP if there was some problem and hazardous situation building up. He would write to the Minister concerned, and mistakes by government were often rectified before they became generally destructive. MPs have so little power now, with the power handed over to Brussels by Treaty, that most people don't bother trying to communicate back to government any more. They simply give up running their businesses, emigrate or find a way to get out of the way of the bureaucratic behemoth that government has become.This is another critical change brought about by the same technology. In the hands of government, computer technology has enabled agencies to be created to manage industries such as farming or fishing, health, health & safety, families, money, education - in fact anything that moves, severely restricting the choices an individual person or company is permitted to take. In such an environment, most decide that it's not worth fighting the system to do any good, as they might have done in a past kinder slower pre-technology world. All people see left is the opportunity to look after themselves. Caring about others or consequences is nigh impossible anyway, and a totally frustrating pointless pastime, with government intruding into every aspect of life. With regulation so powerful a force, and self-responsibility so heavily curtailed, people just concentrate on playing the system, and abandoning the natural tendency to seek a moral or right basis for doing things.Technology has been allowed to dehumanise work, and hamper humanity until people no longer care. The economic advantages of technology are so great that this 'technology' recession need not even be happening. It is though because people have not learned how to limit the negative and destructive elements of technology's advance that the world is being cast into a period of extreme uncertainty.There is a need for a totally new form of thinking, where it is remembered that technology is only a tool, and that humans are always at the centre of events. If those humans are made not to care, and only to seek easy pay-offs, then failure and catastrophy will be the result. It is time for the human side of life to become the focus, for common sense, simple truths to be rediscovered, for bureaucracy to be curtailed and for crazy irresponsible risk-taking to be ended. Right now, we are being destroyed by the inability of people to find fulfilment and contentment, as bureaucracy and big business eats up their lives. The solution is there, but it will take creativity and strength combined to ensure it is found in time. The power of technology must be harnessed, at the same time as the tendency for technology to detach people from reality, must be suppressed. It will be a moral crusade, a reconnection of people with themselves and each other, with the instinctive good sense that silently resides within a person, that needs no electronic data or support. Sometimes in the words of Barack Obama or David Cameron, you can hear the beginnings of an understanding that the world is dangerously out of balance, and that they sense the need for an end to an emphasis on mechanistic process, on state bureaucracy and a refocus on people, their common sense and their well-being. This is the fight for the next generation, to put mankind ahead of, in control of and correctly served by technology. The technology recession is saying that the time for the rediscovery of old-fashioned human qualities has come. It will soon deliver the shocks that the world needs to end the universal arrogance that the computer age has created.
Wednesday, December 31, 2008
Basics Of IT
Information technology (IT), as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware." IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and securely retrieve information.
Today, the term information technology has ballooned to encompass many aspects of computing and technology, and the term has become very recognizable. The information technology umbrella can be quite large, covering many fields. IT professionals perform a variety of duties that range from installing applications to designing complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as the management and administration of entire systems.
When computer and communications technologies are combined, the result is information technology, or "infotech". Information Technology (IT) is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information. Presumably, when speaking of Information Technology (IT) as a whole, it is noted that the use of computers and information are associated.
The term Information Technology (IT) was coined by Jim Domsic of Michigan in November 1981.[citation needed] Domsic created the term to modernize the outdated phrase "data processing". Domsic at the time worked as a computer manager for an automotive related industry.
In recent years ABET and the ACM have collaborated to form accreditation and curriculum standards for degrees in Information Technology as a distinct field of study separate from both Computer Science and Information Systems. SIGITE is the ACM working group for defining these standards.
Today, the term information technology has ballooned to encompass many aspects of computing and technology, and the term has become very recognizable. The information technology umbrella can be quite large, covering many fields. IT professionals perform a variety of duties that range from installing applications to designing complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as the management and administration of entire systems.
When computer and communications technologies are combined, the result is information technology, or "infotech". Information Technology (IT) is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information. Presumably, when speaking of Information Technology (IT) as a whole, it is noted that the use of computers and information are associated.
The term Information Technology (IT) was coined by Jim Domsic of Michigan in November 1981.[citation needed] Domsic created the term to modernize the outdated phrase "data processing". Domsic at the time worked as a computer manager for an automotive related industry.
In recent years ABET and the ACM have collaborated to form accreditation and curriculum standards for degrees in Information Technology as a distinct field of study separate from both Computer Science and Information Systems. SIGITE is the ACM working group for defining these standards.
Wednesday, December 24, 2008
Technological Effects Due 2 IT Recession
Here's the state of play as I see it: it is expensive and difficult to borrow and this shows no sign of change; the US debt is rising instead of falling, propelled by the Iraq War and the reliance on China for material goods unreciprocated by a reliance from China on American goods; and this adds up to difficult times for business in America for at least three years and possibly longer. From these premises, it's possible to cautiously guess at what the future will hold. (Bearing in mind that every day brings new revelations about the grim state of world finance, so the crystal ball is murky at best)
First, this recession will be good for innovation because recessions generally are. During boom times, companies direct development and occupy great talent with at best evolutionary improvements over the state of the art. Companies are great chasers of new things, but aren't great at making new things. A recession means technologists cease to be paid vast amounts to duplicate the work of others. The Great Tech Bust of Ought Two gave us 37Signals, Flickr, and del.icio.us and there's a strong argument to be made that many companies spent the next six years chasing what they created.
Second, this recession will be great for free and open source because of the shortage of cash. Last recession saw the mainstream legitimisation of open source operating systems (youngsters, take note: there was a time when it wasn't automatically okay for an IT department to use Linux) because it was clear and away the most cost-effective choice. The saying I use is, "come for the price, stay for the quality". Perhaps this recession will legitimise many of the applications (CRM, finance, etc.) higher up the stack. (However, I'm not about to stick my neck out and predict 2009 as The Year of the Linux Desktop)
Third, open source services and cloud computing will benefit from the tight financial situation where conditions will favour opex and not capex. It wil be nigh impossible to borrow to buy hardware or a major software license. An open source software product is free to get through the door, and services around it are delivered from opex not capex. Similarly, cloud computing lets a company pay a little to use someone else's enormous capital investment. It looks like, if the rumours are true, Microsoft will launch Windows Cloud just in time. Don't expect to see anyone else putting in new data centres any time soon—in fact, the days of deep-pocketed investors covering high burn rates are over for a while.
Most consumer apps will be a harder sell with the US dollar in the gutter while the country haemorrhages cash overseas. This is bad but won't make profit impossible, you just have to really be making something consumers need. Apps like Wesabe might find a whole new audience in a recession (disclaimer: O'Reilly is an investor in Wesabe). The conditions don't suit speculative acquisitions, so expect a return to the focus on the bottom line that (very briefly) characterised the fallout from the '01 tech bust. Sorry, dreams of getting people to pay for your toothpick collector social network may have to wait until the return of the stupid money in 2013.
As Phil Torrone said, people will have more time than money. This is good for open source software, but also for hardware and Make-style reconnection with the objects around us. The low-cost high-impact physical events we've created (Ignite, hacker meetups, coworking spaces, foo/bar camps) will thrive even as big-ticket conferences feel the effects of pinched pennies. The killer app in the "web meets world" space may just come from a Maker with spare time who sees a great need.
That's how I see the world and what I think it might favour and disadvantage. How do you see it? What am I missing? Share your views in the comments, and a Head First SQL fridge magnet set for the commenter whom I find the most insightful.
First, this recession will be good for innovation because recessions generally are. During boom times, companies direct development and occupy great talent with at best evolutionary improvements over the state of the art. Companies are great chasers of new things, but aren't great at making new things. A recession means technologists cease to be paid vast amounts to duplicate the work of others. The Great Tech Bust of Ought Two gave us 37Signals, Flickr, and del.icio.us and there's a strong argument to be made that many companies spent the next six years chasing what they created.
Second, this recession will be great for free and open source because of the shortage of cash. Last recession saw the mainstream legitimisation of open source operating systems (youngsters, take note: there was a time when it wasn't automatically okay for an IT department to use Linux) because it was clear and away the most cost-effective choice. The saying I use is, "come for the price, stay for the quality". Perhaps this recession will legitimise many of the applications (CRM, finance, etc.) higher up the stack. (However, I'm not about to stick my neck out and predict 2009 as The Year of the Linux Desktop)
Third, open source services and cloud computing will benefit from the tight financial situation where conditions will favour opex and not capex. It wil be nigh impossible to borrow to buy hardware or a major software license. An open source software product is free to get through the door, and services around it are delivered from opex not capex. Similarly, cloud computing lets a company pay a little to use someone else's enormous capital investment. It looks like, if the rumours are true, Microsoft will launch Windows Cloud just in time. Don't expect to see anyone else putting in new data centres any time soon—in fact, the days of deep-pocketed investors covering high burn rates are over for a while.
Most consumer apps will be a harder sell with the US dollar in the gutter while the country haemorrhages cash overseas. This is bad but won't make profit impossible, you just have to really be making something consumers need. Apps like Wesabe might find a whole new audience in a recession (disclaimer: O'Reilly is an investor in Wesabe). The conditions don't suit speculative acquisitions, so expect a return to the focus on the bottom line that (very briefly) characterised the fallout from the '01 tech bust. Sorry, dreams of getting people to pay for your toothpick collector social network may have to wait until the return of the stupid money in 2013.
As Phil Torrone said, people will have more time than money. This is good for open source software, but also for hardware and Make-style reconnection with the objects around us. The low-cost high-impact physical events we've created (Ignite, hacker meetups, coworking spaces, foo/bar camps) will thrive even as big-ticket conferences feel the effects of pinched pennies. The killer app in the "web meets world" space may just come from a Maker with spare time who sees a great need.
That's how I see the world and what I think it might favour and disadvantage. How do you see it? What am I missing? Share your views in the comments, and a Head First SQL fridge magnet set for the commenter whom I find the most insightful.
Software Pros
The roller coaster of bailouts, jobs reports and yo-yoing gas prices that has defined the 2008 recession has even many experts saying they don't know what will happen in the long term. To get a sense of how software developers and the IT industry at large are being affected by the recession, we talked to a few software pros in the trenches. While they're starting to feel the pain, there are a few bright spots.
Lawrence Oliva, a senior consultant and program manager with CH2M HILL, a global engineering and program management company based in Englewood, Colo., said his firm was just beginning to experience some delays in software development project starts and extensions of work into next year, primarily on the commercial side of the company's client base. Federal government projects have not really been affected, he said.
However, some work for cities and municipalities has been deferred, he said, such as "metrics data -- tracking data for cities on various projects," and "some database work, SAP and Oracle, has slowed or stopped," he added.
John Scarpino, director of quality assurance at a large U.S. financial institution and a university instructor, said his firm is trying to acquire another large financial institution, so project work remains steady. "We are trying to hire more younger IT staff to fill in some open and new roles. The largest projects we've been seeing have been around Web-based application projects; e-banking is booming."
However, he expects the drive to reduce costs to have an impact internally, from "trying to reduce individuals with higher pay, and triple-tasking instead of double-tasking, and outsourcing."
Interactions Inc. in Carmel, Ind. -- a developer of voice hybrid technology for call centers as a service that is funded on venture capital (VC) -- has been somewhat insulated from the effects of the recession thus far, according to Mike Kelly, director of testing and quality assurance. "We can sell the product two ways: We help you make more money, but we can also sell to help the bottom line, by outsourcing, cutting resources, etc. So we can position well in both a good and not-so-good economy. As an organization we're still actively hiring developers to meet demand."
Kelly acknowledged that being VC-funded "insulates you a little, but clients are still knocking on the door, which is good news. Other startups in this area are kind of a mix; a couple are hiring and a couple are letting some go."
However, he added that he "suspected there would be a delay before we felt it in IT, and about six months from now I suspect to feel it."
Indeed, in its September report on the third quarter of 2008, Forrester Research wrote: "Software and IT services vendors will start to feel the pain. Sales of these products and services have so far avoided much slowdown in 2008. However, they will be hard hit in the next three quarters. Still, 'hard hit' is relative -- vendors in these categories will have on average 3% to 5% growth instead of the 9% to 12% growth they've seen earlier in 2008."
That forecast, according to Forrester, assumed two to three quarters of negative real growth ending in Q2 2009. But Forrester published an alternative view in October; "The most likely alternative economic prospect is for a longer and deeper recession that lasts into 2010. In that scenario, U.S. IT market growth in 2009 would slip to 2% to 3% in annual growth, with several quarters of declining purchases, instead of our current projection of 6% for 2009. Global IT market growth would have a similar deceleration, moving from 7% to 8% that we currently project for 2009, to much slower growth of 3% to 4%."
Data from Boston-based IT project consultancy The Standish Group's annual survey on investment plans found that in the area of application development services, 22% of respondents plan to spend more in 2009, 50% the same and 28% plan to spend less. This contrasts with last year's survey, in which 23% of respondents planned to spend more in 2008, 69% the same and 8% planned to spend less.
"We're seeing a downturn in the overall IT industry of 10% to 20%," said Jim Johnson, chairman of The Standish Group. "The only thing that's up is security; everything else is showing a downward trend."
So far, Kelly said the recession hasn't affected staffing at his company, but he said his software pro peers at other companies are nervous. "I run workshops in Indianapolis on software testing. There are a number of people I know in software testing who are sending resumes or looking because their company might be downsizing in the future. I think more people are looking around for work or nervous about jobs they're at now."
Oliva said there has been no impact to his company's IT consulting staff to date, and so far clients have been able "to weather the storm."
"There's been a small reduction, but extraordinarily small," Oliva said. "Right now IT departments are working on a backlog of activities and trying to maximize the productivity of the workforce they support. But given the high ratio of users to support staff, which is now probably 100-to-1 or higher, it's going to be hard to cut that to zero."
In terms of software product investments, both Oliva and Scarpino said the focus will be on the bottom line. "Tools that will not give [clients] more than 5% to 20% productivity increases will probably not be purchased," Oliva said. "For example, automated code generators are big, automatic software configuration tools, firewall tools, some data mining tools. Those are probably the biggest investment areas."
The bottom line for companies is, how does this project affect us right now, Scarpino said. "I haven't seen, in my company or previous company, any major initiative toward research-oriented projects. It's more about cost-saving and keeping the motors running."
Poor Quality Magnifies the Effects of a Recession for Software Development Organizations
A new white paper from Seapine Software provides steps for weathering trying economic times through an increased focus on quality
Mason, OH—September 10, 2008—According to Quality-Centric ALM in a Down Economy, a new white paper released by Seapine Software, companies can survive an economic downturn by increasing their focus on quality.
Seapine’s research shows that many organizations cut back on testing and QA activities in the rush to develop and release products. Releasing products regularly helps maintain mindshare, but ignoring quality to push software out the door results in:
Avoidable labor costs
Increased baseline costs
Delayed sales and lost revenue
Diminished reputation and market share
Regulatory non-compliance
Findings indicate that software quality often suffers because of one or more of the following:
Organizations assume that testing will find the problems.
Time to market is the key measurement for success.
QA is not involved from the beginning.
Developers only want to work on new features and leave quality up to the QA department.
The white paper includes research from the National Institute of Standards and Technology (NIST), the Gartner Group, and the Seapine Software Quality-Ready Assessment. Along with that data, it provides ways to overcome the issues threatening software quality and thrive during a recession.
The Quality-centric ALM in a Down Economy white paper is available at www.seapine.com/downeconomy.
About Seapine Software
With over 8,500 customers worldwide, Seapine Software, Inc. is the leading provider of quality-centric application lifecycle management solutions. Headquartered in Mason, Ohio, with offices in Europe and Asia-Pacific, Seapine solutions help companies reliably and efficiently develop quality software applications. Seapine's products support best practices, integrate into all popular development environments, and run on Microsoft Windows®, Linux®, Sun Solaris®, and Apple Macintosh® platforms.
Lawrence Oliva, a senior consultant and program manager with CH2M HILL, a global engineering and program management company based in Englewood, Colo., said his firm was just beginning to experience some delays in software development project starts and extensions of work into next year, primarily on the commercial side of the company's client base. Federal government projects have not really been affected, he said.
However, some work for cities and municipalities has been deferred, he said, such as "metrics data -- tracking data for cities on various projects," and "some database work, SAP and Oracle, has slowed or stopped," he added.
John Scarpino, director of quality assurance at a large U.S. financial institution and a university instructor, said his firm is trying to acquire another large financial institution, so project work remains steady. "We are trying to hire more younger IT staff to fill in some open and new roles. The largest projects we've been seeing have been around Web-based application projects; e-banking is booming."
However, he expects the drive to reduce costs to have an impact internally, from "trying to reduce individuals with higher pay, and triple-tasking instead of double-tasking, and outsourcing."
Interactions Inc. in Carmel, Ind. -- a developer of voice hybrid technology for call centers as a service that is funded on venture capital (VC) -- has been somewhat insulated from the effects of the recession thus far, according to Mike Kelly, director of testing and quality assurance. "We can sell the product two ways: We help you make more money, but we can also sell to help the bottom line, by outsourcing, cutting resources, etc. So we can position well in both a good and not-so-good economy. As an organization we're still actively hiring developers to meet demand."
Kelly acknowledged that being VC-funded "insulates you a little, but clients are still knocking on the door, which is good news. Other startups in this area are kind of a mix; a couple are hiring and a couple are letting some go."
However, he added that he "suspected there would be a delay before we felt it in IT, and about six months from now I suspect to feel it."
Indeed, in its September report on the third quarter of 2008, Forrester Research wrote: "Software and IT services vendors will start to feel the pain. Sales of these products and services have so far avoided much slowdown in 2008. However, they will be hard hit in the next three quarters. Still, 'hard hit' is relative -- vendors in these categories will have on average 3% to 5% growth instead of the 9% to 12% growth they've seen earlier in 2008."
That forecast, according to Forrester, assumed two to three quarters of negative real growth ending in Q2 2009. But Forrester published an alternative view in October; "The most likely alternative economic prospect is for a longer and deeper recession that lasts into 2010. In that scenario, U.S. IT market growth in 2009 would slip to 2% to 3% in annual growth, with several quarters of declining purchases, instead of our current projection of 6% for 2009. Global IT market growth would have a similar deceleration, moving from 7% to 8% that we currently project for 2009, to much slower growth of 3% to 4%."
Data from Boston-based IT project consultancy The Standish Group's annual survey on investment plans found that in the area of application development services, 22% of respondents plan to spend more in 2009, 50% the same and 28% plan to spend less. This contrasts with last year's survey, in which 23% of respondents planned to spend more in 2008, 69% the same and 8% planned to spend less.
"We're seeing a downturn in the overall IT industry of 10% to 20%," said Jim Johnson, chairman of The Standish Group. "The only thing that's up is security; everything else is showing a downward trend."
So far, Kelly said the recession hasn't affected staffing at his company, but he said his software pro peers at other companies are nervous. "I run workshops in Indianapolis on software testing. There are a number of people I know in software testing who are sending resumes or looking because their company might be downsizing in the future. I think more people are looking around for work or nervous about jobs they're at now."
Oliva said there has been no impact to his company's IT consulting staff to date, and so far clients have been able "to weather the storm."
"There's been a small reduction, but extraordinarily small," Oliva said. "Right now IT departments are working on a backlog of activities and trying to maximize the productivity of the workforce they support. But given the high ratio of users to support staff, which is now probably 100-to-1 or higher, it's going to be hard to cut that to zero."
In terms of software product investments, both Oliva and Scarpino said the focus will be on the bottom line. "Tools that will not give [clients] more than 5% to 20% productivity increases will probably not be purchased," Oliva said. "For example, automated code generators are big, automatic software configuration tools, firewall tools, some data mining tools. Those are probably the biggest investment areas."
The bottom line for companies is, how does this project affect us right now, Scarpino said. "I haven't seen, in my company or previous company, any major initiative toward research-oriented projects. It's more about cost-saving and keeping the motors running."
Poor Quality Magnifies the Effects of a Recession for Software Development Organizations
A new white paper from Seapine Software provides steps for weathering trying economic times through an increased focus on quality
Mason, OH—September 10, 2008—According to Quality-Centric ALM in a Down Economy, a new white paper released by Seapine Software, companies can survive an economic downturn by increasing their focus on quality.
Seapine’s research shows that many organizations cut back on testing and QA activities in the rush to develop and release products. Releasing products regularly helps maintain mindshare, but ignoring quality to push software out the door results in:
Avoidable labor costs
Increased baseline costs
Delayed sales and lost revenue
Diminished reputation and market share
Regulatory non-compliance
Findings indicate that software quality often suffers because of one or more of the following:
Organizations assume that testing will find the problems.
Time to market is the key measurement for success.
QA is not involved from the beginning.
Developers only want to work on new features and leave quality up to the QA department.
The white paper includes research from the National Institute of Standards and Technology (NIST), the Gartner Group, and the Seapine Software Quality-Ready Assessment. Along with that data, it provides ways to overcome the issues threatening software quality and thrive during a recession.
The Quality-centric ALM in a Down Economy white paper is available at www.seapine.com/downeconomy.
About Seapine Software
With over 8,500 customers worldwide, Seapine Software, Inc. is the leading provider of quality-centric application lifecycle management solutions. Headquartered in Mason, Ohio, with offices in Europe and Asia-Pacific, Seapine solutions help companies reliably and efficiently develop quality software applications. Seapine's products support best practices, integrate into all popular development environments, and run on Microsoft Windows®, Linux®, Sun Solaris®, and Apple Macintosh® platforms.
Tuesday, December 23, 2008
Depression due to Recession
Depression is more than just occasionally having the blues. Depression is a mood disorder. You feel sad and have no joy in life. You may feel that you have nothing to live for. There are many types of depression, from simple depressed mood to Major Depression - a life-threatening illness.
An International MBA is an important decision for most students not only because it involves a substantial investment of money and time, but also because it is important for making a career change for some people. For others, it is a route to making an international career while for others it is simply to seek a good alumni network.
How effective an MBA is, in meeting these end objectives, is clearly a function of what kind of program you enroll into.
In good times, it did not matter much, which B-school you went to, but in bad times like these, every decision can become important. Shorter programs have suddenly gained relevance. In some cases, students have begun to opt for lower cost programs at lesser known B-schools or even seek out specialized programs.
Should one undertake an MBA in such an environment then? While these are good times for a sabbatical, admission in B-Schools are also becoming difficult thanks to the deluge of aspirants in the current environment.
Aspirants with I-T related backgrounds face this problem more than others thanks to the increasing number of former software/hardware engineers who are on the bench these days.
One solution that is often used by students is to increase their number of applications so as to make sure that they are able to get into some school or another. This is not a right move and often works to an applicants disadvantage because he/she is unable to justify to each school why they would want to enroll for their respective program.
Others choose to apply to lower ranked schools than they should be applying to, simply because the number of applications to every school has increased.
Seeking advice can solve a lot of these problems. Talking to students and alumni from your chosen school, local representatives of overseas institutions and doing extensive research on the Internet can be a fruitful exercise in helping you making your shortlist.
Inflation provides an easy excuse for even the smallest suppliers to try and raise prices. Suppliers often see inflation as a golden opportunity to increase margins and make up for the preceding lean years where they have been forced to give you price concessions.
So what are you to do when markets are rising and negotiating power swings in favor of the sellers? Do you succumb to the widely held belief that pricing control and predictability go out the window in inflationary times?
No way! There are several negotiating tactics that you can use to achieve cost containment that is better than market performance, even when prices for everything seem to be going up.
Improve Communications - Providing your supplier with better and more robust information can reduce perceived risks and lower your costs. Share real time sales data, inventory levels, and production output figures with your supplier to increase trust and eliminate the need for your suppliers to "hedge."
Commit to a Longer Term Deal - In inflationary times suppliers have a greater ability to choose their customers. You can become more important to your supplier by committing to a long term agreement. You can also deepen the relationship through joint process improvements targeted at reducing waste or improving yields.
Ensure Future Protection - While agreeing to a long term deal can make you more valuable to your suppliers and earn you the associated benefits, agreeing to a long term, fixed price deal just as the market peaks can be one of the worst mistakes you can make.
Commodity prices are often cyclical. Negotiate the right type of price adjustment clause into your contracts so that today's price hike doesn't become permanent. Contract clauses should be structured to reflect the specific type of direct material being sourced and should allow for bi-directional price adjustments so that you can receive cost concessions when the market slows.
There are always things you can do to improve your situation. The opportunity to work with your suppliers on reducing the "soft costs" of doing business together exists irrespective of market conditions. Getting your suppliers to agree to increase the services they offer yourcompany or decreasing transactional costs through order automation, consolidated shipments, and similar process improvements are great ways for you to add value to your company, even when inflation is running wild.
An International MBA is an important decision for most students not only because it involves a substantial investment of money and time, but also because it is important for making a career change for some people. For others, it is a route to making an international career while for others it is simply to seek a good alumni network.
How effective an MBA is, in meeting these end objectives, is clearly a function of what kind of program you enroll into.
In good times, it did not matter much, which B-school you went to, but in bad times like these, every decision can become important. Shorter programs have suddenly gained relevance. In some cases, students have begun to opt for lower cost programs at lesser known B-schools or even seek out specialized programs.
Should one undertake an MBA in such an environment then? While these are good times for a sabbatical, admission in B-Schools are also becoming difficult thanks to the deluge of aspirants in the current environment.
Aspirants with I-T related backgrounds face this problem more than others thanks to the increasing number of former software/hardware engineers who are on the bench these days.
One solution that is often used by students is to increase their number of applications so as to make sure that they are able to get into some school or another. This is not a right move and often works to an applicants disadvantage because he/she is unable to justify to each school why they would want to enroll for their respective program.
Others choose to apply to lower ranked schools than they should be applying to, simply because the number of applications to every school has increased.
Seeking advice can solve a lot of these problems. Talking to students and alumni from your chosen school, local representatives of overseas institutions and doing extensive research on the Internet can be a fruitful exercise in helping you making your shortlist.
Inflation provides an easy excuse for even the smallest suppliers to try and raise prices. Suppliers often see inflation as a golden opportunity to increase margins and make up for the preceding lean years where they have been forced to give you price concessions.
So what are you to do when markets are rising and negotiating power swings in favor of the sellers? Do you succumb to the widely held belief that pricing control and predictability go out the window in inflationary times?
No way! There are several negotiating tactics that you can use to achieve cost containment that is better than market performance, even when prices for everything seem to be going up.
Improve Communications - Providing your supplier with better and more robust information can reduce perceived risks and lower your costs. Share real time sales data, inventory levels, and production output figures with your supplier to increase trust and eliminate the need for your suppliers to "hedge."
Commit to a Longer Term Deal - In inflationary times suppliers have a greater ability to choose their customers. You can become more important to your supplier by committing to a long term agreement. You can also deepen the relationship through joint process improvements targeted at reducing waste or improving yields.
Ensure Future Protection - While agreeing to a long term deal can make you more valuable to your suppliers and earn you the associated benefits, agreeing to a long term, fixed price deal just as the market peaks can be one of the worst mistakes you can make.
Commodity prices are often cyclical. Negotiate the right type of price adjustment clause into your contracts so that today's price hike doesn't become permanent. Contract clauses should be structured to reflect the specific type of direct material being sourced and should allow for bi-directional price adjustments so that you can receive cost concessions when the market slows.
There are always things you can do to improve your situation. The opportunity to work with your suppliers on reducing the "soft costs" of doing business together exists irrespective of market conditions. Getting your suppliers to agree to increase the services they offer yourcompany or decreasing transactional costs through order automation, consolidated shipments, and similar process improvements are great ways for you to add value to your company, even when inflation is running wild.
Depression due to
Section 2
Global Insight's Technology Markets practice provides the products, customized information, and tools necessary to size your markets, determine growth prospects for established and new product lines, and recognize opportunity, while reducing risk. We work with leading-edge technology companies around the world, including:
· Information technology service providers
· Leading software firms
· Hardware vendors
Make more informed strategic decisions with customized forecasts and planning services.
Global Insight's Technology Markets practice provides you with an independent, comprehensive range of market analysis, forecasts, and consulting services needed to make more informed and profitable business decisions. Working closely with your management team, we can properly size technology markets in order to identify emerging opportunities by segment and geography. All our analysis and market recommendations are done in the context of your existing capabilities and long-term business plan.
Global Insight can help you to:
· Analyze technology markets by industry, country, and product/service segment
· Continually monitor and forecast technology market activity
· Model and project the full potential of new products and services
· Identify risk factors and develop mitigation plans
· Anticipate the impact of regulatory and policy changes
· Enhance economic development strategies
Global Insight's typical analysis builds upon our standard coverage of technology spending for over 70 industries and more than 200 countries. We go well beyond the traditional segmentation of revenue by product class, industry, and geography. With one of the world's largest privately held data collections, we are able to infuse all of our analyses with key macroeconomic insights that substantially improve the performance and accuracy of your planning process.
Products and Services
· Global Technology Markets: Spending Data and Forecasts
· Technology Markets: Customized Strategic Assessments
· Technology Markets: Segmentation and Market Planning
· Technology Markets: Business and Sales Forecasting
· Global Technology Markets: Geographic and Industry Coverage
Global Insight Technology ExpertsOur expert team provides an independent, fact-based view of technology markets, fully supported by more than 350 economists and analysts with expertise in over 120 industries and 200 countries worldwide.
Global Insight is the leader in economic and financial analysis, forecasting, and market intelligence—with more than 40 years of experience and an outstanding record for accuracy.
Although economists haven't yet labeled the economic downturn a recession, every time payrolls have declined this consistently since 1948 the economy has been officially in recession, according to the Economic Policy Institute, a Washington-based liberal think tank.
"We view this as a crisis economy for American workers," said Andrew Stettner, deputy director of the National Employment Law Project, a pro-labor advocacy group in New York. "It really adds up to a lot of hardship and a lot of uncertainty for people looking for jobs and a lot of insecurity for everyone who's already working."
For job hunters, this summer has been unforgiving. The number of people out of work for six months or more jumped by 160,000 from July to August. And the number of workers who want full-time employment but can't find it has hit 10.7 percent — a recessionary level, according to economists Jared Bernstein and Heidi Shierholz of the Economic Policy Institute.
Even college graduates are feeling the pinch. Their 2.7 percent unemployment rate is the highest since 2004, while the 9.6 percent unemployment rate for workers without a high-school diploma is the highest since 1996.
Most of the August job losses were again in the manufacturing sector, which shed 61,000 positions, the most in five years. In the past seven years, 20 percent of manufacturing jobs have disappeared despite improving U.S. export numbers, said Scott Paul, executive director of the Alliance for American Manufacturing.
"For those naive forecasters and pundits who believe that higher international shipping costs, more exports and a weaker dollar will inevitably lead to an American manufacturing renaissance, this is surely disappointing news," Paul said.
While hourly wages have grown 3.6 percent compared with last year, they're still being outpaced by inflation. The most recent inflation figures for July show that prices are up 5.6 percent over 2007 — which means less buying power for consumers.
Food and beverage costs are up 5.8 percent from July 2007 to July 2008 and have jumped 8 percent over the past three months.
Falling gasoline prices will help many families. But Ken Goldstein, an economist at the Conference Board in New York City, doesn't think that consumers dealing with rising inflation and health-care costs will notice much difference.
"It's not easing the squeeze on the household budget," Goldstein said of the falling price of gasoline.
Many companies already have cut employee health coverage or shifted more of the costs to covered workers through higher deductibles, co- pays and out-of-pocket spending. Currently, average annual worker contributions for single and family coverage are $694 and $3,281, respectively, according to the most recent data by the Kaiser Family Foundation.
But 59 percent of U.S. businesses plan to increase employee deductibles, co-payments and out-of-pocket spending limits next year, according to a new survey by Mercer, a New York-based consulting firm.
Section 1
Economists are increasingly certain that the US has slid into recession, according to a latest survey by the Wall Street Journal.
Following months of speculation about the dreaded 'R' word, the new survey shows a 'precipitous shift' toward pessimism from the previous one conducted five weeks earlier and is reinforced by new data showing a sharp drop in retail sales last month, the paper says.
In a survey conducted between March 7 and 11, 36 of 51 respondents, or more than 70 per cent, said that the economy is in recession.
The Commerce Department had said earlier this week that retail sales fell 0.6 per cent in February; sales excluding the volatile auto and auto-parts categories fell 0.2 per cent.
The declines, the Journal says, reflect a sharp slowdown in consumer spending, which accounts for more than 70 per cent of US economic activity, as Americans grapple with high gasoline and food costs and declines in home values and other asset prices.
The economists, it said, now expect non-farm payrolls to grow by an average of just 9,000 jobs a month for the next 12 months -- down from a previously expected 48,500. Twenty economists expect payrolls to shrink outright.
On an average, the economists predicted the unemployment rate to be 5.5 per cent in December, up from the current 4.8 per cent. The economists, on an average, forecast meagre economic growth -- just 0.1 per cent at an annual rate in the current quarter, and 0.4 per cent in the second, the survey shows.
Although the classic definition of recession is two consecutive quarters of declines in the gross domestic product, Stephen Stanley of RBS Greenwich Capital was quoted as saying that the National Bureau of Economic Research, the nonpartisan organisation that is the official arbiter of recessions, doesn't always strictly follow that definition.
"If you go back to the 2001 recession, there was only one negative GDP quarter, and there might not even be one negative quarter in this recession," he said.
Almost half the economists surveyed said a recession this year could be worse than the 2001 and 1990-91 downturns. Amid the rising concerns, respondents expect more action from policy makers.
Some 63 per cent said the use of public money to deal with the housing crisis is now likely or certain, while on average they expect the Federal Reserve to lower the target for its benchmark federal-funds rate to 2 per cent by June from the current 3 per cent.
Fed policy makers, the Journal said, will meet on Tuesday, and futures markets are fully pricing in at least a 0.5-percentage-point cut in the rate and indicating a 90 per cent probability of a 0.75-point cut.
Officials had, before this week, been unconvinced that a 0.75-point cut was needed, given signs that inflation psychology is worsening, the report added. But those views, it says, may have been affected by continued upheaval in credit markets, as well as weak retail sales and employment data.
Market participants said this would be a risky time to cut rates less than what the investors expect. Most forecasters, the Journal said, expect an economic recovery to begin in the second half of this year, as the government's economic-stimulus package and the interest-rate cuts begin to spur the economy.
By the end of the year, they expect inflation to be running at an uncomfortably high 2.7 per cent, raising the question of when the Fed, the Central bank of the United States, might start raising rates.
Some 84 per cent of economists in the survey said the Fed was too slow to raise interest rates in 2003 and will want to avoid that mistake. The survey, the report says, suggests the darkening outlook may have made Fed Chairman Ben Bernanke's job less secure, especially with a new president coming on the job in less than a year.
The economists gave the Fed chairman just a 59 per cent chance of being reappointed in 2010. Business inventories increased 0.8 per cent in January, suggesting production slowdowns ahead as the economy slows.
Import prices rose 0.2 per cent in February from a month earlier and were up 13.6 per cent from the year before, reflecting the weak dollar and rising commodity prices globally.
Following months of speculation about the dreaded 'R' word, the new survey shows a 'precipitous shift' toward pessimism from the previous one conducted five weeks earlier and is reinforced by new data showing a sharp drop in retail sales last month, the paper says.
In a survey conducted between March 7 and 11, 36 of 51 respondents, or more than 70 per cent, said that the economy is in recession.
The Commerce Department had said earlier this week that retail sales fell 0.6 per cent in February; sales excluding the volatile auto and auto-parts categories fell 0.2 per cent.
The declines, the Journal says, reflect a sharp slowdown in consumer spending, which accounts for more than 70 per cent of US economic activity, as Americans grapple with high gasoline and food costs and declines in home values and other asset prices.
The economists, it said, now expect non-farm payrolls to grow by an average of just 9,000 jobs a month for the next 12 months -- down from a previously expected 48,500. Twenty economists expect payrolls to shrink outright.
On an average, the economists predicted the unemployment rate to be 5.5 per cent in December, up from the current 4.8 per cent. The economists, on an average, forecast meagre economic growth -- just 0.1 per cent at an annual rate in the current quarter, and 0.4 per cent in the second, the survey shows.
Although the classic definition of recession is two consecutive quarters of declines in the gross domestic product, Stephen Stanley of RBS Greenwich Capital was quoted as saying that the National Bureau of Economic Research, the nonpartisan organisation that is the official arbiter of recessions, doesn't always strictly follow that definition.
"If you go back to the 2001 recession, there was only one negative GDP quarter, and there might not even be one negative quarter in this recession," he said.
Almost half the economists surveyed said a recession this year could be worse than the 2001 and 1990-91 downturns. Amid the rising concerns, respondents expect more action from policy makers.
Some 63 per cent said the use of public money to deal with the housing crisis is now likely or certain, while on average they expect the Federal Reserve to lower the target for its benchmark federal-funds rate to 2 per cent by June from the current 3 per cent.
Fed policy makers, the Journal said, will meet on Tuesday, and futures markets are fully pricing in at least a 0.5-percentage-point cut in the rate and indicating a 90 per cent probability of a 0.75-point cut.
Officials had, before this week, been unconvinced that a 0.75-point cut was needed, given signs that inflation psychology is worsening, the report added. But those views, it says, may have been affected by continued upheaval in credit markets, as well as weak retail sales and employment data.
Market participants said this would be a risky time to cut rates less than what the investors expect. Most forecasters, the Journal said, expect an economic recovery to begin in the second half of this year, as the government's economic-stimulus package and the interest-rate cuts begin to spur the economy.
By the end of the year, they expect inflation to be running at an uncomfortably high 2.7 per cent, raising the question of when the Fed, the Central bank of the United States, might start raising rates.
Some 84 per cent of economists in the survey said the Fed was too slow to raise interest rates in 2003 and will want to avoid that mistake. The survey, the report says, suggests the darkening outlook may have made Fed Chairman Ben Bernanke's job less secure, especially with a new president coming on the job in less than a year.
The economists gave the Fed chairman just a 59 per cent chance of being reappointed in 2010. Business inventories increased 0.8 per cent in January, suggesting production slowdowns ahead as the economy slows.
Import prices rose 0.2 per cent in February from a month earlier and were up 13.6 per cent from the year before, reflecting the weak dollar and rising commodity prices globally.
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